# Demographics Predict Capital Account Liberalization

## Model Comparison

| Model | Dep Var | N | Countries | R² | ρ |
|-------|---------|---|-----------|----|----|
| M1: Z → ΔKAOPEN | d_kaopen | 5,710 | 164 | 0.003 | 0.000 |
| M2: old_dep → ΔKAOPEN | d_kaopen | 5,710 | 164 | 0.002 | 0.001 |
| M3: Z → KAOPEN level | kaopen | 5,758 | 164 | 0.251 | 0.969 |
| M4: LPM Z → P(liberalize) | kaopen_liberalized | 5,710 | 164 | 0.008 | 0.419 |
| M5a: FH baseline (I = α + β·S) | investment_gdp | 5,661 | 169 | 0.071 | 0.850 |
| M5b: FH + Z | investment_gdp | 5,661 | 169 | 0.121 | 0.843 |
| M5c: FH + S×Z interactions | investment_gdp | 5,661 | 169 | 0.180 | 0.841 |
| M5d: FH + S×KAOPEN | investment_gdp | 5,204 | 158 | 0.155 | 0.847 |
| M5e: FH triple (S×Z×KAOPEN) | investment_gdp | 5,204 | 158 | 0.209 | 0.837 |
| M6: Z → ΔKAOPEN (high-income) | d_kaopen | 2,296 | 92 | 0.003 | -0.011 |
| M6: Z → ΔKAOPEN (low-income) | d_kaopen | 2,268 | 94 | 0.004 | -0.019 |
| M7: Z → ΔKAOPEN(t+1) | d_kaopen_f1 | 5,756 | 164 | 0.002 | -0.002 |
| M7: Z → ΔKAOPEN(t+2) | d_kaopen_f2 | 5,793 | 164 | 0.005 | 0.001 |
| M7: Z → ΔKAOPEN(t+3) | d_kaopen_f3 | 5,819 | 164 | 0.005 | 0.001 |
| M7: Z → ΔKAOPEN(t+4) | d_kaopen_f4 | 5,834 | 164 | 0.004 | -0.000 |
| M7: Z → ΔKAOPEN(t+5) | d_kaopen_f5 | 5,684 | 164 | 0.005 | 0.000 |

## Key Coefficients

| Variable | Model | Coef | SE | p-value |
|----------|-------|------|----|---------|
| Z_1 | M1: Z → ΔKAOPEN | 0.3076 | 0.1991 | 0.1224 |
| Z_1 | M3: Z → KAOPEN level | 7.1504*** | 1.4536 | 0.0000 |
| Z_1 | M4: LPM Z → P(liberalize) | 0.3840 | 0.2627 | 0.1439 |
| Z_1 | M5b: FH + Z | 27.5763*** | 10.2052 | 0.0069 |
| Z_1 | M5c: FH + S×Z interactions | -30.5206** | 12.1960 | 0.0124 |
| Z_1 | M5e: FH triple (S×Z×KAOPEN) | 20.1569* | 10.3990 | 0.0526 |
| Z_1 | M6: Z → ΔKAOPEN (high-income) | 0.2697 | 0.3438 | 0.4328 |
| Z_1 | M6: Z → ΔKAOPEN (low-income) | 0.4212 | 0.3724 | 0.2582 |
| Z_1 | M7: Z → ΔKAOPEN(t+1) | 0.2310 | 0.1957 | 0.2379 |
| Z_1 | M7: Z → ΔKAOPEN(t+2) | 0.1794 | 0.1906 | 0.3469 |
| Z_1 | M7: Z → ΔKAOPEN(t+3) | 0.1303 | 0.1873 | 0.4865 |
| Z_1 | M7: Z → ΔKAOPEN(t+4) | 0.1077 | 0.1847 | 0.5596 |
| Z_1 | M7: Z → ΔKAOPEN(t+5) | 0.0154 | 0.1894 | 0.9351 |
| Z_2 | M1: Z → ΔKAOPEN | -0.0456 | 0.0302 | 0.1310 |
| Z_2 | M3: Z → KAOPEN level | -0.9676*** | 0.2217 | 0.0000 |
| Z_2 | M4: LPM Z → P(liberalize) | -0.0580 | 0.0398 | 0.1459 |
| Z_2 | M5b: FH + Z | -3.2581** | 1.5323 | 0.0335 |
| Z_2 | M5c: FH + S×Z interactions | 6.6791*** | 1.8201 | 0.0002 |
| Z_2 | M5e: FH triple (S×Z×KAOPEN) | -2.2537 | 1.5680 | 0.1507 |
| Z_2 | M6: Z → ΔKAOPEN (high-income) | -0.0350 | 0.0498 | 0.4820 |
| Z_2 | M6: Z → ΔKAOPEN (low-income) | -0.0766 | 0.0590 | 0.1943 |
| Z_2 | M7: Z → ΔKAOPEN(t+1) | -0.0351 | 0.0297 | 0.2379 |
| Z_2 | M7: Z → ΔKAOPEN(t+2) | -0.0282 | 0.0289 | 0.3301 |
| Z_2 | M7: Z → ΔKAOPEN(t+3) | -0.0211 | 0.0284 | 0.4587 |
| Z_2 | M7: Z → ΔKAOPEN(t+4) | -0.0195 | 0.0280 | 0.4858 |
| Z_2 | M7: Z → ΔKAOPEN(t+5) | -0.0059 | 0.0288 | 0.8379 |
| Z_3 | M1: Z → ΔKAOPEN | 0.0019 | 0.0012 | 0.1299 |
| Z_3 | M3: Z → KAOPEN level | 0.0371*** | 0.0092 | 0.0001 |
| Z_3 | M4: LPM Z → P(liberalize) | 0.0024 | 0.0016 | 0.1398 |
| Z_3 | M5b: FH + Z | 0.1071* | 0.0623 | 0.0859 |
| Z_3 | M5c: FH + S×Z interactions | -0.3373*** | 0.0738 | 0.0000 |
| Z_3 | M5e: FH triple (S×Z×KAOPEN) | 0.0659 | 0.0641 | 0.3034 |
| Z_3 | M6: Z → ΔKAOPEN (high-income) | 0.0013 | 0.0020 | 0.5026 |
| Z_3 | M6: Z → ΔKAOPEN (low-income) | 0.0035 | 0.0025 | 0.1638 |
| Z_3 | M7: Z → ΔKAOPEN(t+1) | 0.0015 | 0.0012 | 0.2276 |
| Z_3 | M7: Z → ΔKAOPEN(t+2) | 0.0012 | 0.0012 | 0.3099 |
| Z_3 | M7: Z → ΔKAOPEN(t+3) | 0.0009 | 0.0012 | 0.4267 |
| Z_3 | M7: Z → ΔKAOPEN(t+4) | 0.0009 | 0.0012 | 0.4233 |
| Z_3 | M7: Z → ΔKAOPEN(t+5) | 0.0004 | 0.0012 | 0.7533 |
| old_dep | M2: old_dep → ΔKAOPEN | 0.1557** | 0.0749 | 0.0378 |
| savings_gdp | M5a: FH baseline (I = α + β·S) | 0.0541*** | 0.0068 | 0.0000 |
| savings_gdp | M5b: FH + Z | 0.0522*** | 0.0068 | 0.0000 |
| savings_gdp | M5c: FH + S×Z interactions | 0.2594*** | 0.0260 | 0.0000 |
| savings_gdp | M5d: FH + S×KAOPEN | 0.1297*** | 0.0092 | 0.0000 |
| savings_gdp | M5e: FH triple (S×Z×KAOPEN) | 0.1889*** | 0.0270 | 0.0000 |
| savings_x_kaopen | M5d: FH + S×KAOPEN | -0.0749*** | 0.0048 | 0.0000 |
| savings_x_kaopen | M5e: FH triple (S×Z×KAOPEN) | -0.0714*** | 0.0096 | 0.0000 |
| savings_x_Z1 | M5c: FH + S×Z interactions | 2.3185*** | 0.2848 | 0.0000 |
| savings_x_Z1 | M5e: FH triple (S×Z×KAOPEN) | 0.0314** | 0.0124 | 0.0115 |
| savings_x_Z1_x_kaopen | M5e: FH triple (S×Z×KAOPEN) | 0.0037 | 0.0043 | 0.3903 |

## Granger Predictability: Z₁ → Future ΔKAOPEN

| Horizon | Z₁ Coef | p-value | R² |
|---------|---------|---------|-----|
| t+1 | 0.2310 | 0.2379 | 0.002 |
| t+2 | 0.1794 | 0.3469 | 0.005 |
| t+3 | 0.1303 | 0.4865 | 0.005 |
| t+4 | 0.1077 | 0.5596 | 0.004 |
| t+5 | 0.0154 | 0.9351 | 0.005 |

## Feldstein-Horioka Results

The savings retention coefficient (β in I = α + β·S) measures capital mobility.
β = 1 implies no capital mobility; β → 0 implies perfect mobility.

| Model | Savings Coef | SE | p-value | R² |
|-------|-------------|-----|---------|-----|
| M5a: FH baseline (I = α + β·S) | 0.0541*** | 0.0068 | 0.0000 | 0.071 |
| M5b: FH + Z | 0.0522*** | 0.0068 | 0.0000 | 0.121 |
| M5c: FH + S×Z interactions | 0.2594*** | 0.0260 | 0.0000 | 0.180 |
| M5d: FH + S×KAOPEN | 0.1297*** | 0.0092 | 0.0000 | 0.155 |
| M5e: FH triple (S×Z×KAOPEN) | 0.1889*** | 0.0270 | 0.0000 | 0.209 |